Tuesday, 17 September, 2024 
Tuesday, 17 September, 2024 
The Securities and Exchange Board of India (SEBI) has issued a statement addressing the recent report by Hindenburg Research, published on August 10, 2024. SEBI has urged investors to stay calm and exercise caution in their reactions to the report, emphasising that Hindenburg Research’s disclosures include a disclaimer about potential short positions in the securities discussed.
The Hindenburg report has raised concerns about SEBI's inaction against the Adani Group and questioned the rationale behind SEBI’s June 27, 2024, show cause notice issued to the research firm. The report also alleges that recent amendments to the SEBI (REIT) Regulations 2014 were designed to benefit a multinational financial conglomerate. SEBI’s response indicates that these allegations are under scrutiny.
SEBI asserted that it has conducted thorough investigations into allegations against the Adani Group. The Supreme Court, in its January 3, 2024, order, acknowledged that SEBI had completed 22 out of 24 investigations into the group by then. Since then, SEBI has finalised one more investigation, with the last one nearing completion. During these investigations, SEBI has issued over 100 summons, approximately 1,100 letters and emails, and sought assistance from various regulators and agencies. More than 300 documents, spanning about 12,000 pages, have been reviewed.
“SEBI has conducted comprehensive investigations into the allegations made against the Adani Group,” the statement read. “We have issued over 100 summons, around 1,100 letters and emails, and sought assistance from both domestic and foreign regulators. More than 300 documents have been examined, and enforcement proceedings are ongoing as per the applicable securities laws.”
SEBI mentioned that it follows a quasi-judicial process in enforcement proceedings, which includes issuing show cause notices and conducting hearings before passing a final order. The regulator emphasised that it refrains from commenting on ongoing investigations or enforcement matters to maintain procedural integrity.
“The show cause notice issued to Hindenburg Research was done following the due process of the law,” SEBI stated. “We are committed to ensuring that all proceedings are conducted in accordance with established procedures and principles of natural justice.”
Hindenburg Row: SEBI Defends Amendments To Regulations
Regarding the SEBI (REIT) Regulations 2014, SEBI defended the amendments, noting that they were introduced after a robust consultation process. “Regulations are notified only after approval by the SEBI Board, following a consultation process involving industry stakeholders and the public,” SEBI explained. “The agenda papers for Board meetings and outcomes of Board discussions are published on SEBI’s website, ensuring transparency.”
In response to Hindenburg’s allegations about SEBI Chairperson Madhabi Puri Buch and her husband’s investments in offshore funds, Buch and her husband Dhaval Buch strongly denied the claims. They described the allegations as baseless and stressed that their investments were made before Buch’s appointment to SEBI and were fully disclosed. The Adani Group also refuted any commercial dealings with the Buchs and emphasised that their investments were minimal and predated Buch’s regulatory role.
Hindenburg had previously alleged that the Buchs’ investments were linked to entities used by Vinod Adani, Gautam Adani’s brother, to manipulate stock prices. SEBI countered these claims by affirming that the investments were transparent and disclosed in compliance with regulatory norms. The Adani Group also dismissed these allegations as manipulative and reiterated their commitment to transparency.
Congress has used the report to renew its call for a Joint Parliamentary Committee (JPC) to investigate the Adani Group’s dealings, while the BJP has dismissed the opposition's demands as part of a conspiracy to destabilise the Indian financial market.